Entries by Ester Hahn

PLANNED DUTY OF DISCLOSURE FOR TAX ARRANGEMENTS

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On 25 May 2018, the ECOFIN Council, consisting of the Ministers of Economics and Finance, passed the Directive (EU) 2018/822 amending Directive 2011/16/EU on the mandatory automatic exchange of information in the field of taxation on relation to reportable cross-border arrangements. This is intended to create an obligation to report potentially aggressive tax-planning arrangements. The directive must be transposed into national law by 31 December 2019. The disclosure obligation will come into force on 1 July 2020.

RESTRUCTURING CLAUSE – ECJ DECLARES AID DECISION NULL AND VOID

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A change of shareholder can lead to a proportional or complete elimination of the existing losses of a company. However, this shall not apply if the acquisition of the investment is made with the aim of restructuring the company. Up to now, however, the EU Commission has regarded this so-called restructuring clause as state aid. The European Court of Justice [ECJ] has recently declared this state aid decision null and void. Therefore, the restructuring clause can be applied again.

REAL ESTATE TRANSFER TAX REFORM WITH RESPECT TO SHARE DEALS

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On 8th September 2016, the federal states of Hesse, North Rhine-Westphalia and Schleswig-Holstein decided to implement a working group with respect to an intended reform of the real estate transfer tax. The reform targets to close down loopholes with respect to structures which are considered abusive regarding the sale of company shares which (mainly) hold real estate properties. Such working group presented a working paper with the key points for new statutory provisions on 21th June 2018.

LIMITED PARTNER OF A GMBH & CO. KG HAS NO RIGHT OF ACTION AGAINST A THIRD-PARTY MANAGING DIRECTOR OF THE GMBH & CO. KG’S GENERAL PARTNER

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According to consistent case-law of the Federal Court of Justice [Bundesgerichtshof – BGH], shareholders can assert certain claims against a fellow partner as litigants in the way of “actio pro socio”. Up to now, it had been a matter of dispute whether or not the limited partner of a GmbH & Co KG is also granted the right to assert claims of a limited partnership against a third-party managing director of the GmbH & Co KG’s general partner. In its decision II ZR 255/16 dated 19.12.2017, the BGH denied this right.

INFORMATION RIGHT UNDER THE REMUNERATION TRANSPARENCY ACT

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As of 6 January 2018, under the Remuneration Transparency Act [Entgelttransparenzgesetz – EntgTranspG], employees can demand information from their employer about the remuneration of colleagues of the opposite sex working in the same or an equivalent occupation. What is important and how can you keep bureaucracy to a minimum?

THE FEDERAL CONSTITUTIONAL COURT HAS RULED: THE RESTRICTION OF “PREVIOUS EMPLOYMENT” BY THE FEDERAL LABOR COURT IS NOT COMPATIBLE WITH THE GERMAN CONSTITUTION

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The years of criticism of the case law of the 7th Senate of the Federal Labor Court [Bundesarbeitsgericht – BAG] by the Regional Labor Courts and the literature have shown their effect: On 6 June 2018, the Federal Constitutional Court [Bundesverfassungsgericht – BVerfG] overruled the BAG’s previous case law on the prohibition of pre-employment in the case of unfounded time limits, leaving legal uncertainty behind. The three-year limit developed and applied by the BAG contradicts the Constitution, according to the BVerfG.

EVERGREEN: HOLDING COMPANIES AND INPUT TAX DEDUCTION

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There is hardly another topic which is monitored in tax audits as closely as the entitlement to input tax deduction for holding companies. The following article illustrates what has to be taken into account and shows which possibilities in terms of structure may potentially arise for the companies concerned.

NO ENTRY OF A GBR AFTER CHANGE OF LEGAL FORM FROM A GMBH

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If a limited liability company is transformed into a company constituted under Civil Law, the question arises, whether it is required to enter the GbR and its shareholders into the commercial register. In practice, such entries have continuously been made, however, the Federal Court of Justice has now negated the necessity of entry. In the same case, it also had to decide on the liability consequences arising from a possibly incorrect entry that had been made.

GIFT TAX ON HIDDEN PROFIT DISTRIBUTIONS – DOUBLE BURDEN OF INCOME AND GIFT TAX?

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Notwithstanding an earlier statement, the Federal Fiscal Court decided in three rulings that excessive payments of remuneration by a limited liability company to an affiliated person of a shareholder are to be recorded for income but not for gift tax purposes. Nevertheless, a double tax burden cannot be ruled out, since the BFH does not exclude a generous donation in the relationship between the shareholder and his affiliated person.

BGH ON THE DETERMINATION OF INSOLVENCY: LIABILITIES II MUST BE TAKEN INTO ACCOUNT

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The Federal Court of Justice has ruled that when determining insolvency, the liabilities (Liabilities II) that fall due within the three-week period after the reporting date must also be taken into account. Furthermore, the decision specifies the considerable evidence and presentation requirements for managing directors of a limited liability company who is being claimed by the insolvency administrator because of the initiation of payments after insolvency maturity.